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What is peak oil?
Peak oil theory states: that any finite resource, (including oil), will
have a beginning, middle, and an end of production, and at some point it will
reach a level of maximum output as seen in the graph to the left.
 Oil production typically follows
a bell shaped curve when charted on a graph, with the peak of production
occurring when approximately half of the oil has been extracted. With some
exceptions, this holds true for a single well, a whole field, an entire region,
and presumably the world. The underlying reasons are many and beyond the
scope of this primer, suffice to say that oil becomes more difficult and
expensive to extract as a field ages past the mid-point of its life.
In the US for
example, oil production grew steadily until 1970 and declined thereafter,
regardless of market price or improved technologies.
In 1956 M. King Hubbert, a geologist for Shell
Oil, predicted the peaking of US Oil production would occur in the late
1960\'s.
Although derided by
most in the industry he was correct. He was the first to assert that oil
discovery, and therefore production, would follow a bell shaped curve over
its life. After his success in forecasting the US peak, this analysis became
known as the Hubbert\'s Peak.
- The amount of oil discovered
in the US has dropped since the late 1930s.
- 40 years later, US oil
production had peaked, and has fallen ever since.
World discovery of oil peaked in the 1960s, and has declined since
then. If the 40 year cycle seen in the US holds true for world oil
production, that puts global peak oil production, right about now; after
which oil becomes less available, and more expensive.
Today we consume
around 4 times as much oil as we discover.
If we apply Hubbert\'s Peak to world oil production
we estimate that approximately half of all oil that will be recovered, has
been recovered, and oil production may reach a peak in the near future, or
perhaps already has.
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